The world is filled with small restaurant chains, many of which hope to one day become big restaurant chains.
That’s where Bryon Stephens and Cameron Cummins come in. The former executives with Marco’s Pizza have taken their talents and formed Pivotal Growth Partners (PGP), a “farm system” that seeks to take small chains and help them reach their next stage of growth.
PGP is already working with four brands, having recently added Conrad’s Grill and Vitality Bowls after previously working with Jeremiah’s Italian Ice and Balance Pan-Asian Grille. The two former executives will use the playbook they learned from Marco’s and Yum Brands to help those chains take the next step.
“We want to create breakthrough growth opportunities,” Stephens said in an interview with Restaurant Business. “We want brands that could be the next 300-1,000 unit concept.”
Stephens is the former president of Marco’s Pizza, which he helped grow from 139 locations to more than 800 by the end of 2017. Cummins is the chain’s former chief development officer.
The pair works with brands and helps provide resources and “day-to-day guidance.” Stephens and Cummins focus on five areas: unit economics, franchisee relationships, marketing and advertising, technology and culture.
Stephens said they begin with a “full analysis of the brand” that begins with unit economics “to ensure it’s really a growth concept and not just a concept somebody wants to sell.”
“We look at the organization to make sure the management team is fully aligned, capable and committed, and have a good vision for where they are headed," he said. "We identify if a brand is differentiated in the marketplace if it’s driving profitable sales.”
PGP also looks at technology, including the website, loyalty program, back-of-house technology and mobile ordering. “Technology is a big part of brands moving forward,” Stephens said.
The firm analyzes its capital needs. Stephens and Cummins will often invest in some of the companies and help them raise capital. And then they work with brands to provide “C-suite services” in the future.
PGP has a team that works with brands on every area, including franchise growth and development, real estate, operations and marketing.
Bryon Stephens/Pivotal Growth Partners
Vitality Bowls is considerably larger than the other companies PGP is targeting. The superfood bowl chain, founded in San Ramon, Calif., in 2011, already operates more than 100 locations and is “self-sufficient,” Stephens said.
PGP didn’t need to invest in the company, but Stephens said the chain is considering an “M&A-type event” that would enable the company to improve its operations and enable its founders to “take some of their equity off the table.”
“It’s a little bit of a different transaction,” Stephens said. “We haven’t done that type of thing.”
PGP did make an investment in Conrad’s, founded near Michigan State University in 2007, and currently operates four locations. The concept serves tater tots loaded with meats, cheeses and sauces that are wrapped in a tortilla and then grilled.
Cameron Cummins/Pivotal Growth Partners
Pivotal Growth Partners also works with Jeremiah’s, a 22-unit, Florida-based Italian ice chain that has won numerous awards. While acknowledging the frozen dessert market to be “a little bit beat up” following the frozen-yogurt fallout, he said the chain is kid-friendly and family-centric.
PGP helped the company with its franchising strategy and helped it raise funds.
The Ohio-based Balance Pan-Asian Grille chain serves pan-Asian bowls, snacks, and tacos with produce supplied from an 8,000-square-foot aquaponics farm. Pivotal is helping that brand raise funds.
The firm has not had a shortage of interest, just more than a year after it was formed. “We’ve been getting a lot of people teeing us up,” Stephens said.
Most private equity firms, he said, “want to find brands that are a little bit more mature than where most of the brands are when we’ve found them.”
“There’s a gap in these companies,” he said. “They’re great, up-and-coming brands but they haven’t reached the $5 million threshold. That’s a little small for mature private equity funds.”
As such, Pivotal works with the brands to get to that point where a private equity fund might be interested. And Stephens said there are a lot of these smaller brands out there, all looking to scale their operations to get the attention of private equity or other investors.
“Many brands have never gotten to the 25-store mark,” Stephens said. “They may have been up-and-comers or hot concepts, but they just weren’t big enough for private equity to come in. They needed a different opportunity to get more mature and get to the point where private equity would look more seriously.”